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ETFs Poised to Benefit from Gene Editing Revolution

Sweta Jaiswal, FRM

A decade ago it would have been hard to believe that someone has created a gene-edited human baby or a human-animal hybrid embryo or has cured diabetes and obesity by making some changes in the DNA. But, following investments of billions of dollars, stories of technological advancement like these are pouring in from across the globe. China is said to have created genetically-edited twin girls and is also making claims of having found the cure for male infertility using the same technique. Encouragingly, Japan has lifted its ban on human-animal hybrids. Meanwhile, Russia is planning to produce more babies by editing the DNA and is also preparing to conduct the world’s first human head transplant. Ever wondered what’s the science behind such inconceivable biological accomplishments? It’s genome editing (read: ETFs to Gain From the Booming Genomics Market).

Genome editing is a technique to alter or modify the DNA of a cell or organism. It uses an enzyme to cut the DNA at a particular sequence and then it is repaired by the cell, making a change to the sequence. As a result, the characteristics of a cell or organism are changed.

Given the growing applications of gene-editing, it is a rising market which offers endless opportunities. In fact, going by a Zion Market Research report, the $3.7-billion global genome editing market of 2018 is expected to reach $9.66 billion by 2025, at a CAGR of 14.7%.

Genomic Editing Advancements and the US

The island of Nantucket, off the coast of Cape Cod, MA, is soon to see an application of CRISPR to combat the Lyme disease. Kevin Esvelt, an evolutionary biologist at MIT, is planning to create Lyme-resistant mice using the gene-editing tool — CRISPR. The researcher will edit the genes of white-footed mice, which are the main carriers of the Lyme bacterium.

Notably, CRISPR (Clustered Regularly Interspaced Short Palindromic Repeats)/Cas9 is a very efficient and fast technique to edit genomes. It is now in early clinical trials for certain disorders like sickle cell disease, cystic fibrosis and Huntington’s disease. This comes after six years of CRISPR technique’s first application on animals. Moreover, a new advanced technique addressing the shortcomings of existing gene-editing platforms  — SATI (intercellular linearized Single homology Arm donor mediated intron-Targeting Integration) — has been developed by scientists at the Salk Institute (read: Top-Performing Biotech ETFs YTD).

In fact, Editas Medicine EDIT and partner Allergan AGN announced the start of enrollments in the Phase 1/2 trial, BRILLIANCE, including 18 patients with an inherited form of blindness called Leber congenital amaurosis 10, or LCA10. Editas’ CRISPR-based medicine — EDIT-101— is expected to be a potent remedy for the disease. Philadelphia-based Spark Therapeutics ONCE has also developed a gene therapy — Luxturna— for patients with inherited retinal disease. Moreover, Chicago-based AveXis’ Zolgensma injects a completely functional copy of the human SMN gene into target motor neuron cells to cure spinal muscular dystrophy.

The FDA is actively supporting advancements in the field of medical science by approving therapies based on the genomic editing technology. In this regard, the FDA’s Acting Commissioner Ned Sharpless has commented, “the FDA will continue to support the progress in this field by helping to expedite the development of products for unmet medical needs through the use of review pathways designed to advance innovative, safe and effective treatment options.”

Genomic ETFs in Focus

The above-mentioned trends have been benefiting genomics ETFs. Here we highlight a host of ETFs that investors can keep a tab on:

ARK Genomic Revolution Multi-Sector ETF ARKG

This is an actively-managed ETF focusing on companies likely to benefit from the extension and enhancement of the quality of human and other life by incorporating technological and scientific developments plus improvements and advancements in genomics into their business. The fund holds 39 stocks in its basket and has 0.75% in expense ratio. It has accumulated $417.3 million in its asset base (read: 5 U.S. ETFs Seeing Fireworks Ahead of July Fourth).

Invesco Dynamic Biotechnology & Genome ETF PBE

This fund follows the Dynamic Biotech & Genome Intellidex Index. The index comprises companies that are majorly engaged in the research, development, manufacturing and marketing plus distribution of various biotechnological products, services and processes and companies that gain significantly from scientific and technological advances in biotechnology and genetic engineering and research. The fund holds 32 stocks in its basket. It has managed $226.2 million in its asset base. Expense ratio comes in at 0.59% (read: Amgen to Buy Celgene's Otezla: 5 ETF Drugs).

Global X Genomics & Biotechnology ETF GNOM

This is a new entrant in the space, having accumulated $14.7 million since its inception on Apr 5, 2019. It seeks to invest in companies that potentially stand to benefit from further advancements in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics and biotechnology. The product follows the Solactive Genomics Index, charging 68 bps in annual fees. It holds 41 stocks in its basket (read: Best June for Stocks in Decades: 5 Best ETFs).

iShares Genomics Immunology and Healthcare ETF IDNA

This is another new entrant, which was launched in June 2019. Tracking the NYSE FactSet Global Genomics and Immuno Biopharma Index, the fund provides exposure to developed and emerging market companies that could gain from long-term growth and innovation in genomics, immunology and bioengineering. Holding a basket of 44 securities, the fund has an AUM of $22.9 million. It charges a fee of 47 basis points. 

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Allergan plc (AGN) : Free Stock Analysis Report
 
Invesco Dynamic Biotechnology & Genome ETF (PBE): ETF Research Reports
 
Spark Therapeutics, Inc. (ONCE) : Free Stock Analysis Report
 
Editas Medicine, Inc. (EDIT) : Free Stock Analysis Report
 
ARK Genomic Revolution ETF (ARKG): ETF Research Reports
 
Global X Genomics & Biotechnology ETF (GNOM): ETF Research Reports
 
iShares Genomics Immunology and Healthcare ETF (IDNA): ETF Research Reports
 
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